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ALARMFORCE INDUSTRIES $10.75 (Toronto symbol AF; TSINetwork Rating: Speculative) (1-800- 267-2001; www.alarmforce.com; Shares outstanding: 12.0 million; Market cap: $128.6 million; Dividend yield: 0.9%) sells twoway voice-alarm systems and monitoring services in Canada and increasingly in the U.S.

In the quarter ended October 31, 2013, the company’s sales rose 10.8%, to $12.6 million from $11.4 million a year earlier. It earned $2.6 million, or $0.21 a share, up sharply from $708,539, or $0.06.

AlarmForce’s revenue rose along with its subscriber base. Earnings were sharply higher because it spent a lot less on marketing than a year ago, in the wake of the launch of its VideoRelay system. This service lets subscribers watch their homes through computers and smartphones. AlarmForce now has 6,600 VideoRelay subscribers, with 3,800 in Canada and 2,800 in the U.S.
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FIRSTSERVICE CORP. $49.52 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.3 million; Market cap: $1.8 billion; Dividend yield: 0.9%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement. FirstService has more than 24,000 employees worldwide.

In the quarter ended December 31, 2013, the company’s revenue rose 14.5%, to $691.7 million from $604.1 million a year earlier (all figures except share prices in U.S. dollars). Excluding one-time items, earnings per share rose 26.0%, to $0.97 from $0.77.

Revenue rose at all three of FirstService’s divisions: Colliers International (commercial real estate), up 21%; FirstService Residential (residential property management), up 9%; and FirstService Brands (property services), up 8%.
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WESTJET $26.11 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493- 7853; www.westjet.com; Shares outstanding: 129.4 million; Market cap: $3.3 billion; Dividend yield: 1.8%) reports that its earnings rose 11.3% in the three months ended December 31, 2013, to $67.8 million from $60.9 million a year earlier. Earnings per share gained 13.0%, to $0.52 from $0.46, on fewer shares outstanding.

Revenue increased 7.6%, to $926.4 million from $860.6 million.

Demand for the company’s flights remains high, and it continues to enter into new partnerships with other airlines.
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CIMAREX ENERGY $111.84 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 86.8 million; Market cap: $9.7 billion; Dividend yield: 0.5%) plans to spend $1.8 billion on exploration and development in 2014, up 12.5% from $1.6 billion in 2013.

The company expects to spend 78% of that on projects in the Delaware Basin, which is part of the larger Permian Basin area of western Texas and southeastern New Mexico.

Cimarex operated 12 horizontal drilling rigs in the Permian Basin last year; it raised that to 16 at the end of January 2014.
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STANTEC INC. $66.17 (Toronto symbol STN; TSINetwork Rating: Extra Risk) (780-917-7288; www.stantec.com; Shares outstanding: 46.4 million; Market cap: $3.1 billion; Dividend yield: 1.0%) sells a range of consulting, project delivery, design and technology services. Its clients operate in a variety of industries, including transportation, construction and oil and gas.

The company continues to grow through acquisitions. It just agreed to pay an undisclosed sum for California-based Processes Unlimited International, which has 450 employees in seven offices across California, Texas, Georgia and Tennessee.

Processes Unlimited offers engineering, project management and design services to customers in a wide range of markets, including oil and gas, alternative energy, utilities, food and beverage, packaging, mining and building products.
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SHERRITT INTERNATIONAL $3.02 (Toronto symbol S; TSINetwork Rating: Speculative) (1-800-704- 6698; www.sherritt.com; Shares outstanding: 297.3 million; Market cap: $1.0 billion; Dividend yield: 1.3%) has announced that its new Ambatovy mine on the island nation of Madagascar, off Africa’s east coast, has achieved commercial production.

Commercial production is defined as 70% of capacity on average over a 30-day period. Sherritt will now focus on reaching full capacity, which is 60,000 tonnes of nickel and 5,500 tonnes of cobalt a year.

Ambatovy is a joint venture that includes Sherritt, which owns 40% and operates the facility; Sumitomo Corp. and Korea Resources Corp., with 27.5% each; and SNC-Lavalin (a recommendation of The Successful Investor) with 5%.
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CHIPOTLE MEXICAN GRILL $552.18 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.0 million; Market cap: $17.1 billion; No dividends paid) is a Denver-based Mexican restaurant chain.

In the three months ended December 31, 2013, Chipotle’s sales rose 20.7%, to $844.1 million from $699.2 million a year earlier. Chipotle’s restaurants attracted more customers in the latest quarter, which pushed up samerestaurant sales by 9.3%. Per-share earnings gained 31.1%, to $2.57 from $1.96.

The company operates in the fickle and competitive U.S. restaurant market. The shares are now well above their April 2012 high of $442.40 and trade at over 45 times Chipotle’s forecast 2014 earnings of $12.20 a share. That’s a high ratio that leaves the stock vulnerable if the company runs into any short-term problems.
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CALIAN TECHNOLOGIES $19.60 (Toronto symbol CTY; TSINetwork Rating: Speculative) (613- 599-8600; www.calian.com; Shares outstanding: 7.4 million; Market cap: $144.7 million; Dividend yield: 5.7%) operates in two areas: the business and technology services division (which supplies 70% of Calian’s revenue) provides engineers, health care workers and other skilled professionals to clients on a contract basis. The systems engineering division (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.

In the three months ended December 31, 2013, Calian earned $2.8 million, or $0.38 a share. That’s down 18.4% from $3.4 million, or $0.45, a year ago. Revenue fell 10.5%, to $51.8 million from $57.9 million.

The business and technology services division continues to benefit from recurring orders from Canadian federal government departments, including the Department of National Defence. However, these clients placed fewer orders in the latest quarter, cutting the division’s revenue by 6.7%. That hurt Calian’s profit margins, which lowered its earnings.
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COMPUTER MODELLING GROUP $29.37 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403-531-1300; www.cmgroup.com; Shares outstanding: 39.0 million; Market cap: $1.2 billion; Dividend yield: 2.6%) sells software and consulting services that help oil and gas producers use advanced recovery techniques to get more out of their wells. It has customers in over 50 countries and offices in Calgary, Houston, London, Caracas, Bogota, Kuala Lumpur and Dubai.

In the three months ended December 31, 2013, Computer Modelling’s revenue rose 14.4%, to $19.2 million from $16.8 million a year earlier. Software licence sales increased, as did consulting and professional services revenue. Earnings rose 17.7%, to $7.2 million from $6.1 million. Per-share earnings gained 18.8%, to $0.19 from $0.16, on fewer shares outstanding.

Computer Modelling holds cash of $64.7 million, or $1.66 a share, and has no debt. It spent $3.8 million, or a high 19.8% of its revenue, on research in the latest quarter.
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AIMIA INC. $19.30 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 173.0 million; Market cap: $3.3 billion; Dividend yield: 3.5%) is buying an unspecified minority stake in Think Big Digital.

This company runs the BIG loyalty program for Malaysian-based AirAsia Berhad and its affiliate, the Tune Group, a hotel operator.

Aimia says it will pay $17 million for its stake, plus an additional $7 million if certain milestones are met by the end of 2015.
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BMTC GROUP $14.45 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 45.5 million; Market cap: $654.7 million; Dividend yield: 1.7%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 33 outlets. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.

In March 2012, BMTC introduced a new banner, EconoMax, which offers lower-priced products. The company rebranded four outlets that had operated as Brault & Martineau liquidation centres.

It opened four more EconoMax stores in 2013, including in Ste-Eustache and Laval in the latest quarter. In the three months ended September 30, 2013, the company’s sales fell 4.2%, to $187.3 million from $195.6 million a year earlier. It earned $0.34 a share in the latest quarter, down 12.8% from $0.39 a share a year ago.
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LEON’S FURNITURE LTD. $15.43 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 70.6 million; Market cap: $1.1 billion; Dividend yield: 2.6%) built its furniture chain on its four main strengths: a huge selection of furniture, appliances and electronics; a lowest-price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.

The company grew by steadily adding new stores until the March 2013 purchase of its main rival, The Brick, for $700 million.

The Brick operates 234 stores across Canada, while Leon’s has 75 in every province except British Columbia. Leon’s and The Brick will continue to operate as separate chains.
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SYMANTEC CORP. $20.54 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (1-408- 517-8000; www.symantec.com; Shares outstanding: 696.0 million; Market cap: $14.3 billion; Dividend yield: 2.9%) earned $0.51 a share in its fiscal 2014 third quarter, which ended December 27, 2013, up from $0.45 a year earlier.

The gains were mainly due to savings from a new restructuring plan that includes laying off 30% to 40% of its managers and simplifying its product lines.

Revenue fell 4.8%, $1.7 billion from $1.8 billion. That’s mainly because the company is retraining its sales staff as part of its restructuring, and that disrupted their closing of new deals. Even so, the latest revenue beat the consensus forecast of $1.66 billion.
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BROADRIDGE FINANCIAL SOLUTIONS $37.25 (New York symbol BR; TSINetwork Rating: Extra Risk) (201-714-3000; www.broadridge.com; Shares outstanding: 119.2 million; Market cap: $4.5 billion; Dividend yield: 2.3%) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada.

Without one-time items, the company earned $31.2 million in its fiscal 2014 second quarter, which ended December 31, 2013. That’s up 43.1% from $21.8 million a year earlier. Earnings per share rose 47.1%, to $0.25 from $0.17, on fewer shares outstanding.

Overall revenue gained 5.6%, to $520.6 million from $493.2 million. Revenue from contracts that pay recurring fees rose 9% and accounted for two-thirds of the total. The remaining third comes from one-time events, such as special shareholder meetings and distributing information when mutual funds change managers.
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FAIR ISAAC CORP. $52.77 (New York symbol FICO; TSINetwork Rating: Average) (415-472-2211; www.fairisaac.com; Shares outstanding: 34.9 million; Market cap: $1.8 billion; Dividend yield: 0.2%) makes FICO Scores, the computer program that dominates the market for software that businesses use to evaluate customer creditworthiness. The company is also profiting by selling software that helps credit card issuers control fraud and analyze cardholders’ spending patterns.

In its fiscal 2014 first quarter, which ended December 31, 2013, Fair Isaac’s earnings per share before one-time items fell 17.0% from a year ago, to $0.73 from $0.88. Revenue fell 3.0%, to $184.3 million from $190.0 million.

The declines mostly resulted from a strong yearearlier quarter that included a big order from a major customer.
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HECLA MINING $3.44 (New York symbol HL; TSINetwork Rating: Extra Risk) (208-769- 4100; www.hecla-mining.com; Shares outstanding: 342.6 million; Market cap: $1.2 billion) produced 2.5 million ounces of silver in the quarter ended December 31, 2013, up 19.6% from 2.1 million a year earlier. Gold output jumped to 47,108 ounces from 15,563.

Most of Hecla’s silver comes from its Greens Creek mine in Alaska and its Lucky Friday project in Idaho. Its Casa Berardi mine in Quebec supplies its gold.

The company expects to produce 9.5 million to 10 million ounces of silver in 2014, with gold output of 210,000 ounces.
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MART RESOURCES $1.34 (Toronto symbol MMT; TSINetwork Rating: Speculative) (403-270-1841; www.martresources.com; Shares outstanding: 356.6 million; Market cap: $477.8 million; Dividend yield: 14.9%) produces oil at its 50%-held Umusadege field in southern Nigeria’s Niger Delta region.

Last year, the company finished building a central processing facility at Umusadege that can process 35,000 barrels of oil a day. That’s enough to handle the field’s current output and all future production increases.

Meanwhile, Mart is reporting steady cash flow and continues to pay quarterly dividends of $0.05 a share, for a high 14.9% yield.
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TRILOGY ENERGY CORP. $26.56 (Toronto symbol TET; TSINetwork Rating: Speculative) (403-290- 2900; www.trilogyenergy.com; Shares outstanding: 99.4 million; Market cap: $3.3 billion; Dividend yield: 1.6%) owns oil and gas properties in central Alberta’s Kaybob and Grande Prairie areas. About 58% of Trilogy’s production is natural gas. The remaining 42% is oil.

In the three months ended September 30, 2013, Trilogy produced 31,211 barrels of oil equivalent a day (including gas), down 6.6% from 33,412 barrels a year earlier. Cash flow per share rose 15.0%, to $0.46 from $0.40, on higher oil prices.

The company plans to spend $375 million on exploration and development this year, down 6.3% from the $400 million it likely spent in 2013. As well, it’s now focusing on its shale oil prospects at Kaybob and spending less on its more mature oil pools in the same area.
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GOODYEAR TIRE & RUBBER CO. $26.56 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 248.1 million; Market cap: $6.6 billion; Dividend yield: 0.8%) has risen almost 9% since we made in our #1 pick for 2014 in the last issue.

The gains came after the company reported strong earnings in the latest quarter. It also announced that it has used its rising profits to add $1.15 billion in cash to its U.S. hourly workers’ defined -benefit pension plan. This plan is now fully funded.

In the quarter ended December 31, 2013, lower North American sales and a stronger U.S. dollar cut Goodyear’s overall sales by 5.0%, to $4.8 billion from $5.0 billion a year earlier.
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TIM HORTONS $57.94 (Toronto symbol THI; TSINetwork Rating: Average) (905-845-6511; www.timhortons.com; Shares outstanding: 147.1 million; Market cap: $8.5 billion; Dividend yield: 2.2%) operates 3,588 coffee-anddonut shops in Canada, 859 in the U.S. and 38 in the Persian Gulf.

In the three months ended December 31, 2013, sales rose 10.7%, to $898.5 million from $811.6 million a year earlier. Same-store sales gained 1.6% at its Canadian outlets and 3.1% in the U.S. Earnings per share, before one-time items, rose 15.9%, to $0.80 from $0.69.

The company aims to extend its lead on competitors like Starbucks and McDonalds. Its plans include simplifying its menu displays and speeding up service, both in-store and at the drive-through. As well, it will likely introduce new items aimed at younger customers, such as milk- and juice-based drinks and healthier options.
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Pat McKeough responds to many requests from members of his Inner Circle for specific advice on investing in stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....

In the February 2013 issue of Canadian Wealth Advisor, we named Bank of Nova Scotia our #1 safety-conscious pick for 2013 at $58.80 a share. The stock hit all-time highs and by the end of the year it had risen by 12.9%, or 16.8% including dividends. We think it has further gains ahead....

PRECISION DRILLING CORP. $10 (www.precisiondrilling.com) has raised its quarterly dividend by 20.0%, to $0.06 a share from $0.05. The new annual rate of $0.24 yields 2.4%. Volatile oil and gas prices and a lack of pipelines have hurt drilling activity....

TRANSCONTINENTAL INC. $14 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 78.0 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.5; Dividend yield: 4.1%; TSINetwork Rating: Average; www. tctranscontinental.com) is Canada’s leading printer of flyers, magazines, newspapers and books. This business accounts for 67% of its revenue and 85% of its earnings. The remaining 33% of revenue and 15% of earnings comes from publishing 35 magazines and 175 daily and weekly newspapers.

Advertisers continue to shift to the Internet. That’s why Transcontinental’s revenue fell from $2.2 billion in 2009 to $2.0 billion in 2011 (fiscal years end October 31). In 2012, the company traded its Mexican printing plants for six Canadian facilities. The new plants brought its revenue up to $2.1 billion in both 2012 and 2013.


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CGI GROUP INC. $35 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 310.7 million; Market cap: $10.9 billion; Price-to-sales ratio: 1.1; No dividends paid; TSINetwork Rating: Extra Risk; www.cgi.com) is the lead contractor for the healthcare.gov website, which lets Americans shop for health insurance plans under the Affordable Care Act (or Obamacare).

Due to problems with the website, the U.S. government will not renew CGI’s contract when it expires in February 2014. Even so, the revenue from the renewal—about $90 million U.S.—is small next to the company’s annual revenue of $10 billion. Moreover, the website issues should have little long-term impact on the company’s reputation.

CGI Group is still a buy.

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